1. The petitioner had share transactions in respect of listed shares with a stock broker being the respondent No. 1 abovenamed. There had been disputes and differences between the parties. The petitioner approached Securities Exchange Board of India (SEBI) for redressal of his grievance. SEBI advised him to approach the National Stock Exchange. Accordingly, the petitioner approached the National Stock Exchange. The National Stock Exchange advised him to lodge his complaint in the form of a claim application and choose one of the Arbitrators from their panel for resolving the disputes by way of arbitration in accordance with the bye-laws of the Stock Exchange. The petitioner had chosen five names from the panel. Similarly, the stock broker also did the same thing. The Stock Exchange found one Mr. P.K Sanyal common in both the panels and as such Mr. Sanyal was appointed Arbitrator as chosen by both the parties. Mr. Sanyal did not incline to act as Arbitrator. The Stock Exchange finding no other alternative appointed one Mr. Ajoy Agarwal, was the lone member left in the panel not chosen by any of the parties. Mr. Agarwal accordingly entered appearance. The pleadings were filed before him. The petitioner duly participated in the arbitration proceedings at the initial stage. The petitioner thereafter found that Mr. Agarwal was known to the respondents and he misconducted the proceedings by not disclosing his interest and/or relation with the broker being the respondent No. 1. Application was made for his removal. In the application it was contended by the petitioner that one Ramesh Chandra Agarwal was representing the respondent No. 1. The surname of Agarwal was common with the Arbitrator and as such, he apprehended that the said Ramesh Chandra Agarwal was a close relative of the Arbitrator. The Arbitrator dealt with such issue and rejected such plea. The Arbitrator recorded that he had no relationship either with the respondent No. 1 or with the Advocate appearing for them. The applicant being unsuccessful there approached this Court for identical relief. In A.P No. 158 of 2003 this Court initially passed an interim order that the arbitration proceedings would go on but the award would not be published without the leave of the Hon'ble Court. Such order was passed on June 25, 2003 and continued by a further order dated July 11, 2003. The petitioner despite direction of this Court to the effect that the arbitration proceedings would go on had chosen not to appear before the Arbitrator. Repeated adjournments were asked for. The Arbitrator gave adjournments on several occasions as recorded in the award. The said application being A.P No. 158 of 2003 was ultimately dismissed by this Court by a judgment and/or order dated February 18, 2004 as according to the learned Judge the application was devoid of any merit. In the meantime, the petitioner filed another application being A.P No. 154 of 2004. There also the petitioner could not obtain any interim order staying the arbitration proceedings. The Arbitrator ultimately fixed the hearing of the proceedings on November 17, 2003. The Advocate-on-Record of the petitioner wrote a letter to the Arbitrator on November 17, 2003 with a request to adjourn the said meeting. The Arbitrator received the said letter and made his endorsement which reads as follows:—
“Received letter. Meeting will be held today as scheduled. No adjournment can be given.”
2. Such endorsement was made by the Arbitrator at 11-55 a.m on the said date as appears from page 67 of the petition. The petitioner did not appear at the said meeting. The Arbitrator concluded the hearing and ultimately published the award by rejecting the claim of the petitioner. The said award was published on July 9, 2004.
3. After the petitioner came to know that the award was published they filed the present application being A.P No. 372 of 2004, inter alia, praying for setting aside of the award.
4. A.P No. 154 of 2004 in the meantime appeared before me. The same was dismissed as it had become infructuous.
5. The application for setting aside was heard by me on March 23, 2005, April 18, 2005 as well as today i.e April 19, 2005.
6. On perusal of the award it appears that the Arbitrator considered the statement of Facts filed by the petitioner. The Arbitrator found that the transactions were had during the period February 15, 2000 to August 30, 2001. The Arbitrator also found that the basis of the claim was not specific and the applicant could not substantiate the same. The respondents also made a counterclaim in their counter-statement of fact. The arbitrator dealt with the rival contentions of the parties in detail in his award. The claim of the petitioner was ultimately rejected on the ground of limitation as well as for not substantiating the claim by the applicant by producing documentary evidence in support thereof. Counter-claim of the respondents was also rejected in absence of appropriate documentary evidence.
7. Mr. Shyam Sarkar learned Sr. Counsel in support of the application, has challenged the award, inter alia, on the following grounds.
(1) There was no valid agreement between the parties which could give appropriate power to the Arbitrator to arbitrate the disputes referred to him.
(ii) Assuming the Arbitrator had power, the award not having been made within a period of one month from entering upon reference, the award was vitiated by illegality.
(iii) Before concluding the arbitration proceedings the arbitrator should have given a peremptory notice for hearing fixed on November 17, 2003. In absence of such notice being given the arbitrator could not have closed the reference ex parte and thereby Committed illegality.
8. In support of the first contention Mr. Sarkar has drawn my attention to the various provisions of the bye-laws of the stock Exchange. According to Mr. Sarkar, as the petitioner was not a member of the Stock Exchange, he was not amenable to the jurisdiction of the Stock Exchange which could bind him to the bye-laws applicable for the purpose of conducting arbitration proceedings. Mr. Sarkar also contended that in 2001 the membership of the respondent No. 1 was cancelled and during the relevant period the respondent No. 1 was also not a member of the Stock Exchange and as such, the arbitration proceedings could not be had in terms of the laws of the Stock Exchange. Mr. Sarkar has also drawn my attention to the pro forma agreement annexed to the bye-laws. According to him, to bind the party to the share transactions a formal agreement was to be executed which could bind the said party amenable to the jurisdiction of the Stock Exchange. According to Mr. Sarkar, no such formal agreement was entered into by and between the parties and as such, the petitioner was not bound by the bye-laws of the Stock Exchange.
9. On the second contention Mr. Sarkar has drawn my attention to the bye-laws of the Stock Exchange and has contended that it was incumbent upon the arbitrator to publish his award within a period of one month from date. The power of extension, according to Mr. Sarkar, lies with the particular committee. The arbitrator did not have any authority to extend the time to make and publish the award suo motu. Mr. Sarkar has relied upon clause 13 of Chapter XI of the Stock Exchange Bye-Laws which is quoted below:
“13. The arbitrator shall make the arbitrate award within one month from the date of entering upon the reference and the time to make the award may be extended from time to time by the Relevant Authority on an application by either of the parties or the arbitrator as the case may be.
For the purpose of this Bye-law the arbitrator shall be deemed to have entered upon a reference on the date on which the arbitrator has or is deemed to have applied his mind.”
10. Mr. Sarkar has contended that on a logical interpretation given to the clause quoted (supra), it would reveal that the relevant authority was only empowered to extend time on an application by either of the parties or by the arbitrator. According to him, the relevant authority was to be approached by either of the parties or by the arbitrator for extension of time. Having not done so, the arbitrator could not have extended the time suo motu.
11. On the third contention, Mr. Sarkar has contended that before concluding the hearing of the arbitration, the arbitrator decided to proceed ex parte in absence of the petitioner. He was bound to give a peremptory notice for hearing. Having not done so, he committed illegality. In this regard, strong reliance has been placed by Mr. Sarkar in the decision of this Court in the case of Lohia Jute Press P. Ltd. v. New India Assurance Co. Ltd. reported in AIR 1988 Cal 174.
12. Mr. Sarkar has also relied upon the decision in the case of Nazir Ahmad v. King Emperor reported in AIR 1936 PC 253(2) and the decision in the case of Associated Engineering Co. v. Government of Andhra Pradesh, reported in AIR 1992 SC 232.
13. Opposing the setting aside application Mr. S.N Mukherjee, learned Senior Counsel, appearing for the respondent No. 1, has contended that the petitioner, being the claimant in the arbitration proceeding, himself invoked the arbitration clause by filing the statement of fact and by inviting the Stock Exchange to appoint Arbitrator to resolve the dispute through the mechanism of the Stock Exchange as per their bye-laws. According to Mr. Mukherjee, the petitioner participated in the proceeding at the initial stage and thereafter opted to remain absent in the said proceeding despite repeated opportunities given to him. When the award went against him, he is not entitled to question the authority of the Arbitrator, Mr. Mukherjee has further contended that the transaction of listed share with a registered broker of the Stock Exchange is done in accordance with the procedure under the rules and the bye-laws of the Stock Exchange. The very fixture Note to a transaction would show that the parties would be governed by the rules of the Stock Exchange. Mere non-execution of the agreement would not be fatal. He further contends that the petitioner, having participated in the proceeding, is not entitled to challenge the authority of the Arbitrator at this stage.
14. On the issue of peremptory notice, Mr. Mukherjee has drawn my attention to the letter dated November 17, 2003, addressed to the Arbitrator by the learned Advocate-on-Record of the petitioner. Strong reliance has been placed on the endorsement made by the Arbitrator in the copy letter annexed to the petition. According to Mr. Mukherjee, the Arbitrator refused adjournment and made it clear that the meeting would be held as scheduled. According to him, the same is sufficient notice to the petitioner.
15. Mr. Mukherjee has also relied upon the decision in the case of Lohia Jute Press Pvt. Ltd. (AIR 1988 Cal 174) (supra). Relying on the said decision. Mr. Mukherjee has submitted that when a party decided to remain absent and was determined not to appear before the Arbitrator, the Arbitrator was not required to issue notice expressing his intention to proceed ex parte, as observed by P.B Chakraborty, Chief Justice (as His Lordship then was) in the case of Juggilal v. General Fiber Dealers reported in AIR 1955 Calcutta 354.
16. Mr. Mukherjee lastly contends that once the similar issues were dealt with by this Court in its judgment and order passed in A.P No. 158 of 2003, those issues are not open to the petitioner to agitate again before this Court.
17. In a transaction of listed share, the parties to such transaction are bound to follow the rules and regulations applicable therefor. The Stock Exchange Rules and bye-laws are applicable to such transaction. The very Fixture Note to a share transaction would depict that the parties would be governed by the bye-laws of the Stock Exchange. As observed by the Apex Court in the case of J.K Jain v. Delhi Development Authority reported in (1995) 6 SCC 571 : (AIR 1996 SC 318), to come a conclusion that there had been an arbitration agreement between the parties, one has to examine the chain of events and the conduct of the parties. Mere non-execution of a formal agreement would not vitiate the arbitration proceeding. In the said case before the Apex Court, the tender document stipulated that the disputes were to be resolved through arbitration. Although no formal agreement had been entered into by and between the parties, the Apex Court observed that submission of tender and acceptance thereof had constituted a concluded contract between the parties and as such, the arbitration clause was binding upon the parties. Hence, the plea that the arbitration agreement was not existing, is not tenable in law.
18. I wish to examine the question from another angle. The petitioner himself approached S.E.B.I for redressal of his grievance. S.E.B.I advised to approach Stock Exchange. Accordingly, the Stock Exchange was approached. The petitioner filed his statement of claim. The petitioner himself had chosen his nominee as Arbitrator from the approved panel of the Stock Exchange and invited the Stock Exchange to appoint anyone of them. The Stock Exchange on the invitation of the petitioner and at his instance appointed an Arbitrator. The Arbitrator entered upon reference. The petitioner participated in the proceeding at the initial stage and thereafter opted to remain absent on untenable pleas. In my view, the petitioner is not entitled to question the authority of the Arbitrator at this stage.
19. Hence, the first contention of Mr. Sarkar, being not tenable, is rejected.
20. Mr. Sarkar has given his interpretation of Clause 13 of Chapter XI. Clause 13 provides that the arbitral award should be made within one month from the date of entering upon reference or within the time so extended from time to time “by the relevant authority on an application by either of the parties or the Arbitrator”. According to Mr. Sarkar, the clause should be interpreted in the manner as suggested by him. Mr. Sarkar submits that the relevant authority was the only authority to extend the time in the application of either of the parties or the Arbitrator.
21. If I have to accept the interpretation given by Mr. Sarkar, in that case, if the parties do not apply for extension of time, then the Arbitrator will have to apply for extension before the authority. I do not find any logic behind such interpretation. If the parties do not intend to have the time extended by the relevant authority, why the Arbitrator will apply for extension suo motu is a question whose answer cannot be supported by any logical conclusion. The only other interpretation which could be given is that the relevant authority, on the application by either of the parties, would be entitled to extend the time. The Arbitrator will also have the identical power to extend the time, as the case may be. In case of relevant authority, such extension would be given at the instance of either of the parties and in case of Arbitrator, it can be both. If one looks to the award itself, it would appear that several adjournments were asked for by the petitioner on one pretext or the other and those adjournments were given by the Arbitrator to accommodate the petitioner. Even on the last date of hearing on November 17, 2003, the petitioner's learned Advocate-on-Record wrote to the Arbitrator asking for further adjournment which was denied. The delay in conducting the arbitration proceeding was on account of the petitioner and the petitioner only. The law of Arbitration has taken a radical change specially after the 1996 Act coming into force. If one looks to the Act, in its true spirit, would appear that the Legislature thought it fit that the parties should resolve their dispute through an alternative domestic forum instead of approaching the Court of Law. It was not the intention of the Legislature to tie the hands of the Arbitrator with the hypertechnicalities rather to streamline the process of resolving the dispute in a more pragmatic way. When a party is determined to forestall the proceeding and the Arbitrator from time to time accommodated him by granting adjournments and by extending the time to conclude the reference, such party should not be given any indulgence to take this plea at this stage when the award had gone against him and that too in a proceeding held ex parte after giving repeated opportunities to him. The second contention of Mr. Sarkar, being not tenable, is also rejected.
22. On the third plea of Mr. Sarkar, it has been submitted that a peremptory notice should have been given. May I first deal with the letter dated November 17, 2003 appearing at page 67 of the petition. The said letter was written by the learned Advocate-on-Record for the petitioner making a request to the Arbitrator to adjourn the meeting at least till November 28, 2001. The content of the said letter would suggest that the petitioner had notice to the effect that the meeting was fixed on that date. When the notice was tendered to the Arbitrator, the Arbitrator made an endorsement to the effect that the meeting would be held as scheduled and no adjournment could be given. Even then the petitioner did not choose to appear before the Arbitrator. The Division Bench decision of this Court in the case of Lohia Jute Press (AIR 1988 Cal 174) (supra) has been relied upon by Mr. Sarkar as well as by Mr. Mukherjee. Paragraph 18, being relevant herein, is quoted below:—
“Mr. Bhabra has pointed out that in the trial Court, the Arbitrator himself did not file any affidavit stating that he had given to the insurance company notices of the sittings held subsequent to the 8th sitting. Secondly, in the present case the insurance company did not manifest any intention not to join and participate in the arbitration proceedings. Sabyasachi Mukharji, J. (as he then was) in the case of Dipti Bikash Sen v. India Automobiles Ltd. 82 Cal WN 838 : AIR 1978 Cal 454 had considered earlier reported decisions including those of Sir Asutosh Mookherjee, J. in the case of Udaichand v. Debibux AIR 1920 Cal 853 : ILR 47 Cal 951 and the judgment of Phani Bhusan Chakraborty, C.J in the case of Juggilal v. General Fiber Dealers AIR 1955 Cal 354 : 59 Cal WN 146 and in paragraph (3) of his judgment Sabyasachi Mukharji, J. had summed up the principles governing the Arbitrator's right to proceed ex parte:—
(1) If a party to an arbitration agreement had failed to appear at one of the sittings, the arbitrator could not or, at least ought not to, proceed ex parte against him in that sitting.
(2) Where non-appearance was accidental or casual the arbitration should not ordinarily proceed in the ordinary way, fixing another date of hearing and awaitng the future behaviour of the defaulting party.
(3) If, on the other hand, it appears that the defaulting party had absented himself for defeating the object of the reference, the arbitrator should issue a notice that he intended at specified time and place to proceed with the reference and that if the party concerned did not attend he would proceed in his absence.
(4) But if after making such peremptory appointment issuing such a notice the arbitrator did not in fact proceed ex parte on the date fixed, but fixed another subsequent date, he could nor proceed ex parte on such subsequent date, unless he issued a similar notice in respect of that date as well.
(5) If he issued a similar notice and the party concerned did not appear, an award made ex parte would be in order. But if he did not issue such notice on the second occasion but nevertheless proceeded ex parte, the award would be liable to be set aside in spite of a notice of peremptory hearing having been given in respect of the earlier date, subject however to the condition that prejudice was caused to the party against whom the ex parte order was made.
Sir Asutosh Mookherjee, J. (as he then was) in the case of Udaychand v. Debibux (AIR 1920 Cal 853) (supra), had recognized that giving of such peremptory notices prior to proceeding ex parte was a requirement not of law but of prudence. Therefore, in a particular circumstance where a party was determined not to appear before the Arbitrator, in any event, or he had openly repudiated the reference, the Arbitrators are not required to issue a notice of an intention to proceed ex parte (see also discussion by P.B Chakraborty, C.J at page 154 of his judgment in the case Juggilal v. General Fiber Dealers (AIR 1955 Cal 354) (supra), and the quotations made by the learned Chief Justice from Russell on Arbitration, 11th Edition.”
23. The Division Bench was of the view that when non-appearance was accidental or casual, the arbitration should ordinarily proceed fixing another date of hearing, but if on the other hand, the defaulting party was absenting to delay the object of reference, the Arbitrator should issue a notice that he intended at the specified time and place to proceed with the reference ex parte. In the instant case, the Arbitrator, by the very endorsement, made it clear that no adjourned would be given and the proceeding would be held as scheduled. Reliance was placed by the Division, Bench on the observation of Sir Asutosh Mpokherjee, J. in the case of Udaichand v. Dibibux reported in AIR 1920 Calcutta 853 wherein this Court observed that giving of such peremptory notice, Drior to proceeding ex parte, was a requirement not of law but of prudence. Therefore, in particular circumstances when the party is determined not to appear before the Arbitrator, in any event, he had openly repudiated the reference, the Arbitrators were not required to issue a notice of an intention to proceed ex parte. Same was also observed by the Chief Justice in the case of Juggilal (AIR 1955 Cal 354) (supra).
24. The Arbitrator, in his reasoned award, recorded that several adjournments were given at the instance of the petitioner. The petitioner initially appeared before the Arbitrator and thereafter made frantic attempts to forestall the proceeding on one plea or the other. His application before this Court, challenging the authority of the arbitrator, was also dismissed by this Court. When this Court passed an interim order to the effect that the arbitration proceeding would go on, the petitioner chose not to appear before the Arbitrator and allowed him to proceed ex parte. In this context the third plea of Mr. Sarkar, being not tenable, is also rejected.
25. In the result, the application fails and is hereby rejected. There would be, however, no order as to costs.
26. Urgent xerox certified copy, if applied for be supplied to the parties upon compliance of all formalities.
Application dismissed.